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The IT Industry's Red Shift Theory
Stony Stevenson writes "Sun Microsystems' CTO, Greg Papadopoulos has come out with a Red Shift Theory for IT which posits that an 'elite group of companies are consuming inordinate amounts of IT infrastructure, well beyond most other businesses, and that their demand is growing exponentially. This trend, Papadopoulos maintains, has implications not just for IT's most insatiable consumers, but for the structure of the computing industry itself. It's not just about how many CPU cycles a company uses. Papadopoulos argues that red-shift companies will enjoy exponential business growth in the coming years. Blue-shift companies — those whose processing needs aren't exploding — will grow at about the same rate as GDP, he says.'"
A hardware company says that buying more hardware is a good thing for your company. News at eleven.
(Yawn).
Qxe4
This is backwards. Companies which are buying hardware are buying hardware because they already have a successful business model (or one they expect to be successful). The differentiator between successful and unsuccessful companies isn't how much hardware they buy, it's the viability of their business plan/product.
I cannot seem to understand why people cannot see this flaw as easily as I do. Success of a company is often measured by its growth rate and indeed by its rate of increase on the growth rate (acceleration). There is a limit for EVERY market. There is a saturation point for every market. And when the health of a company is measured not by its stability or state in the market place but by "growth and acceleration" I have to wonder what drives the mentality that it's actually a good idea outside of what it does for those who buy and sell stocks on the market. (So yes, that's exactly what it's all about... duh)
So when did we all lose sight of what is good for a company? Matters like quality and customer satisfaction are no longer a consideration? And every time I hear "this company is buying that company" or "we're on a growth surge" or some other such nonsense, I have to wonder why anyone would think this sort of institutional business instability is a good idea for anyone except those who play the stock market?
Will we have to suffer another great depression before people realize that the cause of so many of our business, labor and national monetary health problems are rooted deeply in the short-sighted notion that whatever a business does it should be as a means to provide value for shareholders? I think the answer is yes because short of a disaster, people will have little motivation to see where this all leads and turn around before it's too late. And unfortunately, while one person might catch a glimpse of the future and become more sane, the people who are still insane will consume him as a means of satisfying their growth strategy. I get the mental image of a bunch of cannibals strategizing their own growth and acceleration success plans in how to consume their environment. The logic is rather unsettling to me.
There is no correlation between IT spending and productivity or profitability.
This is the same old saw that hardware firms used in the 1980s-1990s. Gartner used to say you should spend on IT as a proportion of your revenue.
But numerous studies, based on publicly available data, debunk that view as bullshit.
It's not that IT is bad -- it's just that you have to blame or praise management for the proper application of it. Which is just another way of saying "you can't spend your way through problems without thought".
NOW, there's a valid argument here, but it's a lot more subtle than the bylines. One has to dig into Papadopoulos' quotes to get the jist of this as: "you should have the management insight to take advantage of the inherent cost savings that are due to Moore's law." This has been hampered for decades due to inflexibility with the software -- something that virtualization and utility computing is seeking to fix, and an area that Sun wants to compete in. Indeed, this is a big deal.
But it doesn't mean your computing needs will skyrocket, unless your management has an insightful, productive application for all of that power. Google does (selling advertisements along side day-to-day networked computing needs), but I'm not sure the rest of the Fortune 500 has turned to apply that level of creativity to their situation.
-Stu
Exponential growth for a business isn't even possible
Sure it is. 2% growth is exponential.
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